How I Built A $1.4B Software Giant Called AmplitudeㅣSpenser Skates, Amplitude

you can start a company at any age you can start it in your 20s you can start in your 30s you can start it in your 40s or 50s like any age is is possible the key thing to understand is how hard it is and how much of a life commitment it is I've been very deliberate about sculpting my entire life to allow me to build this company and so that extends to my personal life uh that extends to where I live that extent of what I think about I just obsess about what I'm doing

here day in day out like very cand look I I've fallen out of touch with so many friends uh because I've been so focused and dedicated on building this and part of me misses out on that but part of me realized that's the choice I made in life and I'm okay with that you know and I'm okay with that trade-off because I knew that that's uh what it takes to build my number one advice would be hi my name is Spencer skates I'm CEO and co-founder of amplitude amplitude is a digital analytics platform we help

you understand what your users are doing in your digital product so we've grown enormously fast we then launched it in 2014 since that time we've grown from 0 270 million in annual recurring Revenue over the course of just under 10 years and so we have uh 2,700 companies on us including a lot of the Fortune 100 in the United States and then took the company public uh to the market via a direct listing in 2021 we're valued in the billion doll plus range now we're thinking about how do we continue to grow the company and

take over the world at Microsoft or at Google or going to consulting or Finance except for one person and that was my current co-founder Curtis moving to California moving in with Curtis I got a mattress on his bedroom floor and we did that for a few months and uh the first thing that we worked on was this app called sonaly it was a voice recognition application that allowed you to talk to your phone to send and receive text messages this was actually before Siri we actually we launched it we had a good amount of usage

we had few hundred thousand people download the app and so it's okay somebody's using it you know that that we don't know there's there's real usage for this thing and we got up on stage at demo day and we had the most amazing demo Day presentation effort the problem was a few months after demo day we couldn't get any of our users to stick around they would try out the app they'd be like wow this is kind of cool but then they'd churn out and they wouldn't continue to get value out of it and so

we wanted to understand why that was we built our own analytics platform to help us understand so we couldn't get their attention high enough because the the key factor was how accurate the voice recognition was to figure that out though took all this munging and customization of the data and trying to understand okay well how does that correlate to whether someone comes back 2 weeks later and if they get a first recognition event and it's accurate and we just spent all this time on this internal infrastructure when it came time to wind down sonolite we

said wow actually a lot of the companies other companies we talk to say hey we can't get these same insights about the product experience we really want to know what drives engagement and retention so can we get what you built on the analytics side and you know first we said no that's just an internal tool we have but then after we decided to wind down son light we said hey maybe there's something here I remember in June of 2012 we ended up making the decision to uh switch over fulltime into building out this analytics platform

and that was the start of amplitude uh we launched the company in 2014 and they been growing since to this day in terms of folks who I know have my interests as a Founder deeply at Heart Like Paul Graham and Y commentator is at the top of the list most of the time within YC because we were working on sonite was spent talking about hey how do we grow it how do we launch it how do we get more users on it and we meet with them weekly about it I remember this one conversation Sam

mman was starting to get involved at the time because he had just wound down looped I remember Sam really challenged us about how passionate we were about this problem and whether we think we were going to be successful and I remember saying to him yeah you know we're not particularly passionate users of voice recognition as a technology we just think it's a cool technology he's like yeah you guys should work on something else and so that was the Genesis of us deciding to wind down sonite and ending up working on uh amplitude one of the

biggest mistakes we made with sonolite was not spending enough time talking with our customers we would build product because as Engineers that's what you know how to do you know how to build product how do you talk to customers I don't know like you know uh it's weird it's awkward it's uncomfortable but one of the things we did with amplitude very purposely was saying hey I'm going to make sure I spend half my time talking to customers no matter what and so before we even built product we just reached out to 30 other companies and

to do research and to ask them hey is this a pain point would you use this what are your pain points how do you think about this in terms of how it fit fits in your business and through that process we actually found about seven companies that were interested in in using amplo turns out like only one of them actually ended up using it after that but we felt we had enough validation um and enough understanding of the sort of problems that that they want solved that's my number one thing which is as a Founder

how do you spend half your time interfacing and really understanding customers it's so easy to do other things it's so easy to if you're an engineer build product it's so easy if you're a designer to spend time on that but it's very very easy to not spend time on talking to your customers so as a founding team you have to be very deliberate about spending 50% of your time engaged with with users perfect the enemy of good my point there is that I think one of the mistakes people get into is thinking hey I don't

want to let go of this idea we were really in love with the potential voice recognition it was this new technology that was at the bleeding edge of what's possible it was hard to imagine a future without it very highly technical problem it was what I'd call a 95th percentile idea so it was in the top 5% of ideas after doing it a year you realized like one we weren't passionate about the space and then two the technology wasn't quite there yet and so it wouldn't be possible to create a breakthrough and so while it

was a good attempt we knew we could do better in terms of what we built and so we got incredibly lucky we searched around at a lot of different ideas and we ended up zeroing in on analytics and in retrospect that was a 99th percental idea for us was top 1% of ideas first we were there was a big pain out there we knew that the web was shifting from a marketing Centric web to a product Centric web and would require a new set of infrastructure and so what Google analytics and Adobe had done in

the previous generation would need to be redone there was an opportunity to buildt something massive the second is that we were the right Founders for it we were hardcore algorithms Engineers to figure out how to create a system that successfully processes massive volumes of data and spits out a result was perfectly in our wheelhouse there was the opportunity was there it was a great match for who we were as Founders I think of as a 99th percentile idea and I'm so glad that we made the decision to wind down sonite as a result and go

after something great you you often want to just go build something and building stuff is great uh but you also have to ask yourself continually the question of am I building the right thing I I regret it in retrospect we should have been able to launch in six months instead of taking a year and a half I made such a big mistake I stopped talking to users in the middle of it it and we just focused on building and as it turns out there were a lot of people who would try it out and use

it for free but none of them were actually interested in paying us and it wasn't until July of 2013 that I actually got our first customer to agree to pay us and I should have asked for money much earlier because then I would have realized we weren't talking to the right companies I remember I was in a meeting with this company called super lucky casino very first amplitude customer and I went through the demo and the pitch uh this guy named Brett Taylor and we got to the end of it and he asked asked me

a question I had never been asked before up to that point he asked me how much does the product cost and I'm like what like I don't even know what to answer I've always just given this away for free and assumed people would use it for free and then I remember the advice of Patrick McKenzie who says always charge more for your product and I thought I was going to charge maybe $50 a month for this thing so I'm like you know what let me double that and let me ask him for $100 a month

$100 a month is enough let me 10x that think of the biggest number I can think of $1,000 a month so I said $1,000 a month is how much it cost with as much confidence as I could muster and to my surprise he was like okay we'll pay for it and I'm like oh my God holy smoke someone actually wants to buy the software we had built all my dreams of building software that we could charge for had been got validated in that moment were like wow I can actually build a piece of value that

someone wants to buy this is incredible and then we launched the the product 6 months later in 2014 so in retrospect I should have been asking for money way earlier for all those customers I would have gotten a lot of nose but that would have been okay I would have gotten much faster to to someone like Brett and realized I should have been out there trying to keep finding someone until I found found someone with enough pain on this that I could get get them to to pay us money I was afraid because I knew

they would say no or I I had suspicion they would say no and I I wasn't confident enough in my offering yet I was like well I need to make the product better before I can ask for money in retrospect that was backwards I should have just said hey look I know the product's early but I want you to be able to commit some money so that as we build it and make it better to what you want committing as well with the the investment that you're making in it frankly a lack of confidence in

the product it was a lack and dead I should have known hey it's okay to have an early stage underdeveloped product and it's okay still to ask for money for it um even if it's in that state and you're going to get a lot of nose but you don't need doesn't matter how many NOS you get you only need one customer to say yes for you to actually build a business around it and so I I would have understanding that how to work that Dynamic earlier and just focus on companies who are willing to pay

you money would have been allowed us to much more quickly get to the state where we focus on customers that that actually were interested and had the pain enough to pay so after that first customer super lucky casino they introduced us to other companies Brett was an ex product manager from zingga and he had a lot of other former product Managers from zingga who were used to having this sort of data and insights and who didn't now that they were off at other companies but who wanted that and so he ended up introducing us to

SEI Chen who was running this company called hay and then a bunch of other ones and you know we we started to grow within that Community finally in February of 2014 we launched the product for the first time I don't know how they heck they found us but somehow they saw this TechCrunch article and they're like let me reach out to you guys and so we're like cool okay and then they ended up paying us $3,000 a month and it was like okay wow a legit company wants to buy us uh and then it just

started snowballing from there where customers were to refer other customers you know we would we would we would spread as a product okay at the beginning um what was funny was the landscpe was very crowded there were tons of analytics companies that all did similar sounding things Google analytics was the biggest and the default thing you put in there but there were lots of others too the list just went on and on and on there were probably 20 or 30 companies in this space it was very very crowded space the thing we saw when we

looked at it is none of them went deep in the problem so they all did surface level metrics and then stopped there and we said hey if we go much deeper we think there's a ton of value and you don't have to scale off as you grow either because you can't get to the data volumes or you can't get to to large can't get to the depth of insight that you want to most companies don't use this software yet most companies don't understand what their users are doing in their product it's like a black box

that cannot see through our goal is to open up that box and help everyone see what's going on so that they can understand that experience and create a better one we grew from 0 to 1 million in the first year then from 1 to 4 and A2 then from 4 and a half to 14 then from 14 to 31 then from 31 to 53 then from 53 to 80 then for 80 to more than 100 we launched it started 2014 and we got to 100 million by the start of 2020 so it was about 6E

journey in in total uh and to end to to make that which was feel incredibly lucky to have hit that in terms of when you're going from zero to one you're just begging anyone to use the product because you don't have much of a product or a brand or anything be a customer base or you don't have that much Advanced knowledge a problem and so you're trying to consistently pull off Miracles and so would spend my time going out and talking to customers directly I was full-time on the sales side just trying to find opportunities

for us to have as customers and so we would commit uh new parts of the product we'd say hey if you buy us we're going to build this this and this that was the core part of the motion because there was nothing there and so you kind of had to just agree to whatever a customer wanted in order to get them on and get to from zero to one once you get to 1 million in ARR and to go from 1 to 10 you have a kernel that's working and it's all about just trying to

do the same thing you you'll still have to do some of it but then it starts to pick up a momentum of its own it's not constantly pushing you know there's some momentum it has once you get to 10 stuff starts to break down a lot because the what worked in just like doing heroic efforts and single deals does not work you need to build an organization you need to build repeatable processes and scale and so you need to start to bring in outside Executives who work on taking the thing you had and build scalable

programs another salesperson on this how do you enable them how do you uh track and forecast so that you can have good forecast accuracy how can you manage the creation of pipeline regularly so you're always taking something that a miracle you'll pulled off and you're figuring out okay how do I create replicate this in a much more scalable fashion it's crazy it's still surreal I don't believe it I'm way more successful than I ever thought we'd be I feel so so lucky that we were at the right place in the right time and tried to

work on this in the right way and so I just I feel incredibly lucky to to be here and so now what I'm focused on is making sure we don't waste the opportunity we're the leader in the market that we have we have this promise of how we can go take over things I'll tell you one of bit of insight's uh secret about it which is that no matter what size you're at you're always expected to grow more so everyone wants to know how are you going to be 10 times bigger than you are today

even Google gets that question even if you're as successful as Google or Amazon or Microsoft they want to know how you're going to be 10 times bigger it's both a blessing and a curse it's a blessing in that there's always an opportunity to do more but it's a curse just like when I was starting out I felt unsuccessful I feel unsuccessful today because there's so much opportunity we have to go realize so now there are parts that get easier you get a lot more help there uh you get to be able to hire great and

talented people you get the knowledge of being in the market you have a brand you have a product you have customers but there are also parts that get harder you know we have it's hard to to run a large organization and be agile it's hard to make sure you're you don't get too in your own full of yourself and you aren't in front of what's next so it's it's uh you still feel like in a lot of ways that entrepreneur from the early days you can start the a company at any age you can start

it in your 20s you can start in your 30s you can start in your 40s or 50s like any age is is possible the key thing to understand is how hard it is and how much of a life commitment it is I've been very deliberate about sculpting my entire life to allow me to build this company and so that extends to my personal life uh that extends to where I live that extends to what I think about I just obsess about what I'm doing here day in day out and so you have to be in

a spot in your life where you don't have anything else going on my number one advice would be understand that it takes over every single aspect of your life if you're willing to do that I think most people are capable of starting a company but if you're not willing to do that then you know if you have other constraints or other things happening in your life like very candl look I I've fallen out of touch with so many friends uh because I've been so focused and dedicated on building this and part of me misses out

on that but part of me realize that's the choice I made in life and I'm okay with that you know and I'm okay with that trade-off because I knew that that's uh what it takes to build um there's this famous Harvard Business School study that looked at the elements of worldclass performance across many fields and um there were three big ones one was 10,000 hours of practice the second is expert coaching and the third is enthusiastic family support and so I thought a lot about hey how do you set up all of those like you

need to spend a lot of time on it you need to go get help from other people who are really good at this so you can learn much faster and then you have to set up your personal and family life in a way that supports this you know what's tough is a lot of people are not in the place in life where they can do that um and just recognizing that that is a trade of of of building a company but if you can set those things up where you can spend lots of time where

you can get coaching from experts and where you can get uh the support of your family then um you know I think it's it's very possible to do